Beaufort County Council to reconsider reserve-fund policy

Beaufort County Council’s finance committee will discuss a reserve-fund policy once again, after the full council decided Monday the proposal the committee recommended needs a closer look.

At its Feb. 17 meeting, the committee unanimously agreed to recommend an ordinance that would require the county to put at least 0.5 percent of its annual expenditures in its general reserve fund until that fund is equal to 30 percent of the total budget.

County administrator Gary Kubic and deputy county administrator Bryan Hill have estimated the county has roughly $24 million in reserves right now — equal to about 25 percent of its budget. Based on current budget projections, the county would have to contribute about $500,000 annually to the fund over the next dozen years to reach the 30-percent threshold.

During council’s meeting Monday at the Bluffton library, chairman Paul Sommerville asked that the current proposal be sent back to the committee over language concerns within the written ordinance. Specifically, Sommerville worried the ordinance could bind the county to future tax increases if it doesn’t meet the amount required to be in reserves.

“I would personally never vote for an ordinance mandating that we raise taxes under a specific set of circumstances,” Sommerville said.

Many council members want to set aside a larger amount of money in case a natural disaster, such as a hurricane, was to hit the area.

“We collect a lot of money at the beginning of the year, but we collect much less toward the end of the year when we would be more susceptible to a hurricane,” councilman Stu Rodman said. “The county becomes the first responder and a heavy lifter in situations like that, and we would have to have money available to keep the county government up and running while we were waiting on federal reimbursement from FEMA.”

Other benefits, Kubic has said, include using some of the money to support economic growth and bolstering the county’s credit rating, though council members don’t consider those top priorities for the fund.

Some members have expressed hesitance about beefing up the reserve, including councilwoman Cynthia Bensch.

“I’d like the number to be closer to 15 percent, but we’re talking about doubling that,” Bensch said. “I’m concerned with a lot of other issues going on right now. We may have to help the school district with its two new schools (in Bluffton) and we’ve got rising health care costs to deal with. I just think we need to be really cautious.”

Sommerville and councilman Tabor Vaux said the ordinance could wind up obligating future councils to increase taxes. Bensch also raised that concern at previous committee meetings.

Councilman Brian Flewelling said the county wouldn’t necessarily have to raise taxes to meet the obligation.

“We may have an increase in revenue or decrease in expenditures from year to year that might help see us through this,” Flewelling said. “This year we might be putting 1 percent toward the fund balance reserve and might not have to do it the next year.”

Council also would have the power to amend the ordinance whenever it sees fit to account for yearly budget changes, councilman Jerry Stewart said.

Councilman Rick Caporale said the finance committee, which he chairs, will discuss the proposal at its meeting Monday.

“This is one of those tricky policies,” Caporale said. “It has some challenges, and it’s easily misinterpreted. I’m happy to take it back, look at it again, try to rework the language and try to build a little more consensus than we have now.”

Any ordinance must pass three readings by council and a public hearing before it goes into effect.

In other business Monday, council agreed to move forward with establishing a commission to determine if putting a capital-project sales tax referendum on the ballot in November is feasible and what initiatives would be on the referendum.

State law requires the creation of a commission to write and review a capital-project sales tax. County attorney Josh Gruber said council would have to receive the language by July 14 to approve a ballot question for voters by the August deadline.

Under the current code, the commission would consist of three county-appointed members, one representative appointed by the town of Hilton Head Island and two members between Bluffton, the city of Beaufort and Port Royal, Gruber said.

The population-based formula for determining the makeup of the commission, Gruber said, takes the total population of all municipalities in the county and divides that number by three to determine the appointive index.

Each municipality’s total population is then divided by the index to determine the number of appointed representatives on the commission. Based on those figures, Hilton Head Island would get one member, Gruber said.

Because Bluffton, Beaufort and Port Royal have smaller populations, the Hilton Head member and three county-appointed members would then have to select the final two members from municipalities that aren’t represented on the commission, Gruber said.